WHO'S TELLING the truth about the D.C. budget? The public is being treated to another mystifying debate about whether the District's budget will be balanced when the books for this fiscal year are closed after Sept. 30. For example, a recent report by the city's independent auditor, Otis H. Troupe, predicts a revenue shortfall of $17 million. The chairman of the D.C. Council's finance and revenue committee, John A. Wilson, is more pessimistic and predicts $20 to 40 million in red ink. Meanwhile, Mayor Barry is sticking with his statement of July 21, predicting a surplus of $3.1 million. If you're not puzzled, then you're not paying attention.
It would be naive to believe there is some "truth" to be found in all of this, since revenue and expenditure estimates are even more difficult for a large government than they are for a household. But we believe the mayor has the better of the argument.
To begin with, the amounts in dispute are minuscule in comparison with the total size of the District's budget--over $1.6 billion this year. The sharp public reactions to each new blip in the projections, though commendable as appreciation of the need for fiscal order, are excessive even for an election year: a classic confusion of mountain and molehill. Moreover, the always difficult job of budget estimating is certainly complicated by the highly uncertain economy.
Despite the inescapable fog around budgeting, however, the city has made significant progress since it inherited a true management mess. In the spring of last year, the monthly reporting system for revenue and spending trends was forecasting a year-end deficit of $60 million; effective counter-measures and some luck with its soundly conservative forecasting combined to give the administration a year-end surplus instead. The mayor wisely pressed to have those funds applied against the outstanding accumulated debt, and succeeded. This year, that same reporting system revealed in July a $5 million shortfall in predicted revenues (that's three-tenths of 1 percent of the total budget), but an even larger shortfall in expenditures resulted in a new projected surplus of $3.1 million. The auditor's report considered only the projected revenue shortfall and had reasonable differences with the city's experts; the auditor is still developing estimates of the expenditure shortfall.
It is impossible to know where it will all come out on Sept. 30. But Mayor Barry is convincing when he says there is no crisis. In fact, perhaps he should lend his fiscal management staff to Congress and OMB. Their numbers game seems completely out of control.